A former U.S. ambassador has sued three Venezuelan executives, accusing them of racketeering, bribing authorities for energy contracts, and defamation.
The 48-page lawsuit on behalf of Otto Reich, who was Venezuelan ambassador under President George H. W. Bush, was filed in U.S. District Court in Manhattan on Tuesday. The suit claims the men paid kickbacks to government employees in Venezuela in exchange for lucrative contracts for power plant construction.
Reich, 67, who served as ambassador from 1986-1989, and later assistant secretary of state for Western Hemisphere Affairs under President George W. Bush, now heads his own Washington, D.C., consulting firm, Otto Reich & Associates (ORA).
His lawsuit names Leopoldo Alejandro Betancourt Lopez, Pedro Jose Trebbau Lopez, and Francisco D'Agostino Casado as defendants. Trebbau and Betancourt are executives with the energy company, Derwick Associates.
The three men, described in media accounts as "ChavezKids," amassed enormous fortunes by bribing Venezuelan officials in exchange for multi-million-dollar energy contracts for the U.S.-based companies, Derwick Associates USA and Derwick Associates Corp., Reich's lawsuit alleges.
In his lawsuit, Reich, a Georgetown University graduate and native of Havana, Cuba, decried the fleecing of Venezuela and its people by corrupt officials, noting that the defendants "profited wildly from the corrupt and anti-democratic" regime of the late Venezuelan President Hugo Chavez, who passed away in March.
"In recent years, a number of respected individuals and institutions in the United States have begun to speak out against the 'ChavezKids' and their ilk, unwilling to allow the continued fleecing of Venezuela," reads the lawsuit, filed by Reich's New York law firm Smith Valliere.
"Fearing exposure, defendants have gone to extreme lengths to conceal their illegal actions, using abusive business practices, threats of legal action in U.S. courts, and other improper means to silence their opponents and send an unmistakable message of intimidation to anyone who might expose their illegal practices and alter the status quo," the lawsuit reads.
Attorneys Brian S. Kaplan and Hector Torres, partners in the New York City firm Kasowitz, Benson, Torres & Friedman, which represents Derwick executives Betancourt and Trebbau, said in a statement on Thursday to Newsmax that the two deny the charges outlined in Reich's complaint, adding that it is "riddled with falsehoods and inaccuracies."
"The lawsuit filed by Otto Reich and his political consulting firm is meritless, and our clients categorically deny any allegations of improper conduct or wrongdoing in connection with the business of Derwick Associates," they said, noting they are reviewing the lawsuit, which has not yet been served on their clients.
"Derwick has no commercial relationship with Mr. D’Agostino, who is not a Derwick agent, partner, owner, officer, director or operator; in fact, our clients have never even set foot in any offices located at 450 Park Avenue, New York, New York 10022, "the statement read.
"Our clients have never claimed that Mr. Reich worked for Derwick, or otherwise had any of the discussions concerning Mr. Reich with any persons named in the complaint," the statement said.
Attorneys for Reich cited a 2012 lawsuit in their filing. In that case, Derwick contractors in Florida sued one of Venezuela's oldest banks, Banco Venezolano de Credito S.A. for $300 million, a tactic designed to intimidate and bully them, Reich claims. The energy contractors alleged that the bank defamed them by creating a website decrying Chavez as well as the Derwick companies.
Banco Venezolano hired Reich's film to help defend against the actions. The Derwick executives then sought to discredit Reich by planting word that the ambassador was working with Derwick, which the lawsuit says was "blatantly false."
Fearing that connection to Derwick, Banco left Reich's ORA as a client, costing it $20,000 a month in consultancy fees, the lawsuit said. Another ORA client, Eligio Cedeno, a Venezuelan banker who sought and received asylum in the U.S. after being imprisoned by Chavez for two years, also dropped the firm, fearing the same association with Derwick, the lawsuit claims. Cedeno had hired ORA to assist in re-establishing his business connections in his new life living in Miami.
Derwick attorneys called the allegations spurious.
"Our clients have never claimed that Mr. Reich worked for Derwick, or otherwise had any of the discussions concerning Mr. Reich with any persons named in the complaint," they said in a statement, adding that their clients were residents of Venezuela, not New York, "and they conduct no business in New York."
They added: "Derwick is a well-established company with an extremely successful track record. It is engaged in the business of providing engineering, procurement and construction (EPC) services to power plant companies in Venezuela and other countries in South America, and is widely recognized as one of the top EPC contractors in Venezuela.
"Derwick's key executives have extensive industry and leadership experience in EPC, private financing and related energy services businesses, and the company’s completion rate on EPC contracts -- according to objective and publicly published data -- is one of the highest in the industry," the attorneys' statement reads. "We will take all necessary and appropriate measures to defend and protect our clients' rights and reputations."
Reich seeks $6 million in damages, alleging civil conspiracy, trade libel, racketeering, tortious interference with prospective economic advantage, and defamation.
In his lawsuit, the former ambassador talks about the culture of corruption that he believes remains in Venezuela.
"Bribing public officials is illegal in Venezuela. Nevertheless, the country has become a breeding ground for public corruption, especially when it comes to the awarding of public contracts," his lawsuit reads, citing the U.S. State Department's Investment Climate Statement.
The country, Reich outlines in his suit, ranked 165 out of 176 nations of a global corruption index in 2012. He also mentions U.S. government efforts to expose Venezuelan kickback schemes.
"Indeed, unwilling to tolerate bribery and kickbacks by U.S.-connected persons operating in Venezuela, the U.S. government has acted to hold such people accountable," the lawsuit states.
Reich, who served a year as a temporary assistant secretary of state, resigned from the Bush administration in 2004. He has been described in media accounts as a rock star in Latin America where he hosted a Spanish-language version of CNN's popular "Crossfire" program. He also served as a foreign policy adviser to presidential candidates John McCain and Mitt Romney.
Mark W. Smith, who represents Reich in the case, did not return a call from Newsmax for comment on Thursday.
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